Problemanne lockwood manager of oaks mall jewelry wants to, Ask an Expert

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Problem:

Anne Lockwood, manager of Oaks Mall Jewelry, wants to sell on credit, giving customers 3 months to pay. However, Anne will have to borrow from her bank to carry the accounts receivable. The bank will charge a nominal rate of 15% and will compound monthly. Anne wants to quote a nominal rate to her customers (all of whom are expected to pay on time) that will exactly offset her financing costs.

Required:

Question: What nominal annual rate should she quote to her credit customers?

Note: Please provide reasons to support your answer.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91149356

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